Medicaid AMP: Vigilance Continues

Ever since the Federal Register published the final Covered Outpatient Drugs Final Rule (which directs pharmacy Medicaid reimbursement according to the average manufacturer price, or “AMP,” model) on January 21, 2016, NACDS has been evaluating the rule and determining appropriate actions.

The rule and its implementation must be viewed through the lens of its effects on patients’ access to vital medications and pharmacy services.

NACDS has done so according to two key principles that have guided the Association’s actions over nearly a decade related to this issue: that NACDS operates as a member-centric trade association, and that the rule and its implementation must be viewed through the lens of its effects on patients’ access to vital medications and pharmacy services. That was the spirit of NACDS’ initial statement on the final rule posted on January 21, the timeline of this issue’s decade-long history, the update that we provided on our consideration of the final rule, and various analytical and informational resources that we have provided along the way.

Having discussed the final rule extensively with the NACDS Policy Council, the NACDS Executive Committee and the NACDS Board of Directors – as well as with diverse NACDS members at the NACDS Regional Chain Conference and NACDS Annual Meeting – we wanted to provide an update on where we stand at this point on an issue that will continue to play out during the rule’s implementation.

First, it is clear that one of NACDS’ top priorities must be to actively monitor and analyze the implementation of the rule – including actions by state governments and by the Centers for Medicare & Medicaid Services (CMS). As states make legislative and regulatory changes in light of the final rule – to implement AMP-based federal upper limits (FULs), cost-based reimbursement for brands, and professional dispensing fee reimbursement – and as CMS considers related state plan amendments, vigilance will be essential to ensure these changes are conducive to patient access. As a result of advocacy by NACDS and the National Community Pharmacists Association, the final rule includes important provisions related to drug reimbursement and professional dispensing fees and it will be imperative to ensure these provisions are implemented properly through our ongoing state advocacy initiatives.

Second, NACDS member companies and NACDS policy and economic experts are continuing to evaluate the specific effects of the AMP-based FULs on reimbursement. We will maintain a keen eye to identify any problems that arise as this process unfolds.

In that regard, it remains apparent that the successful litigation brought by NACDS and the National Community Pharmacists Association in 2007 – which blocked the original rule that would have implemented the Medicaid pharmacy reimbursement provisions of the Deficit Reduction Act of 2005 – was essential for patient access. PwC estimated that the original rule proposed in 2006 would have led to the forced closure of 11,000 pharmacies – 20 percent of all stores. The current Covered Outpatient Drugs Final Rule is expected to reduce pharmacy Medicaid reimbursement payments, when compared to payments prior to the implementation of this final rule; however, the reductions should not go to the extremes that had been proposed in 2006.

To summarize, this decade-long effort is progressing to a focus on state-level advocacy in those states in which legislative and regulatory changes are necessary; on the treatment of SPAs submitted by states to CMS; and on the ongoing evaluation of the economic impact of the final rule and its implementation. We have greater clarity on this issue than we did at the beginning of the year, but in many ways it is still a work in progress.

As has been the case for the past near-decade, NACDS will continue to evaluate all of these dynamics according to its member-centric approach, and according to any ramifications for patient access.

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National Association of Chain Drug Stores

NACDS represents traditional drug stores, supermarkets and mass merchants with pharmacies. Chains operate over 40,000 pharmacies, and NACDS’ over 80 chain member companies include regional chains, with a minimum of four stores, and national companies. Chains employ nearly 3 million individuals, including 157,000 pharmacists. They fill over 3 billion prescriptions yearly, and help patients use medicines correctly and safely, while offering innovative services that improve patient health and healthcare affordability. NACDS members also include more than 900 supplier partners and over 70 international members representing 21 countries.